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    MCO
    Earnings call· Mar 2026(Q1 FY26)

    MOODYS CORP /DE/ Q1 FY26 earnings call MCO

    Apr 22, 2026 Source

    Executive summary

    Moody's Corporation Q1 FY26 — Strong Performance Driven by Ratings Issuance and Analytics Growth

    Moody's delivered a strong first quarter, driven by robust revenue growth in both its Ratings and Analytics segments, coupled with significant operating leverage. The company capitalized on structural demand for ratings in areas like AI-driven infrastructure and private credit, while expanding its analytics solutions through strategic partnerships and AI integration. Despite geopolitical volatility, Moody's remains confident in its full-year outlook, supported by disciplined execution and a focus on high-quality recurring revenue streams.

    Highlights

    5

    • Adjusted diluted EPS increased 13% to $4.33.

    • Moody's Investors Service (MIS) revenue grew 8% year-over-year, with transactional revenue up 8% and recurring revenue up 9%.

    • Moody's Analytics (MA) revenue grew 8% as reported, or 6% on an organic constant currency basis, with recurring revenue up 11%.

    • Adjusted operating margin expanded by 150 basis points to 53.2%.

    • Returned $1.7 billion to shareholders through buybacks and dividends, and increased full-year buyback guidance by $500 million to $2.5 billion.

    Concerns

    4

    • Transactional revenue in Moody's Analytics declined 54% year-over-year due to divestitures and a focus on recurring streams.

    • Investment grade and high yield spreads widened in March by roughly 15% and 30%, respectively, indicating potential market volatility.

    • Bank loan revenue declined in MIS as activity moderated in March.

    • Structured Finance revenue in MIS was slightly lower year-over-year due to softer CMBS and CLO activity in the U.S.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full-year 2026 share buybacks
    approximately $2.5 billion
    high materiality
    High
    MA full year adjusted operating margin
    34% to 35%
    medium materiality
    High
    MA adjusted operating margin
    mid- to high 30s
    medium materiality
    High
    MIS revenue growth
    low to mid-teens
    medium materiality
    Medium
    Adjusted diluted EPS
    approximately $4.15 to $4.30
    high materiality
    Medium
    Full year MIS revenue growth
    mid-single-digit range
    high materiality
    Low
    Full year adjusted diluted EPS
    low end of our guidance range
    high materiality
    Low
    MA revenue growth
    lower end of our mid-single-digit MA revenue guidance range
    medium materiality
    High
    MA ARR or organic constant currency recurring revenue growth
    high single-digit percent growth range
    medium materiality
    High
    MCO full year revenue growth
    towards the lower end of high single-digit percent range
    high materiality
    High
    Q2 expenses (excluding restructuring)
    broadly in line with Q1
    low materiality
    High
    MCO adjusted operating margins
    above the midpoint of our full year guidance range
    medium materiality
    High
    Full year effective tax rate
    23% to 25%
    low materiality
    High
    Effective tax rate
    high end of the full year range of 23% to 25%
    low materiality
    High
    Total capital returned to shareholders
    approximately 110% of free cash flow
    high materiality
    High
    Ratings issuance growth
    high single-digit percent range
    medium materiality
    Medium
    Ratings issuance growth
    mid-single-digit percent decline
    medium materiality
    Medium
    Ratings issuance growth (sequential)
    mid-teens range decline
    medium materiality
    Medium
    Ratings issuance growth (sequential)
    flat
    medium materiality
    Medium
    Ratings issuance growth (sequential)
    mid-20s decline
    medium materiality
    Medium
    MIS revenue growth
    low double-digit percent
    medium materiality
    Medium
    MIS revenue growth
    mid-single-digit percent
    medium materiality
    Medium
    KYC ARR growth
    mid-teens
    low materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Moody's Investors Service (MIS)
    Delivered the strongest quarter on record, supported by strong primary market activity, relatively tight spreads, increased M&A, and solid investor demand. Strong operating leverage and disciplined cost management contributed to margin expansion.
    Transactional revenue growth: 8% YoYRecurring revenue growth: 9% YoYFirst-time mandates increase: 20% YoY
    		—8%—66.7%
    Moody's Analytics (MA)
    Delivering durable recurring growth, strong retention, and margin expansion while reshaping the portfolio. Transactional revenue declined materially due to divestitures and focus on scalable recurring streams. Margin expansion reflects prior restructuring, cost management, and resource reallocation.
    Recurring revenue growth: 11% as reportedRecurring revenue growth: 7% organic constant currencyRecurring revenue as % of total MA revenue: 98%Transactional revenue decline: 54% YoYARR growth: 8% YoYDecision Solutions ARR growth: 10%KYC ARR growth: 13%Banking ARR growth: 10%Lending solutions growth: high teensInsurance ARR growth: 7%Research and Insights ARR growth: 7%Data and Information ARR growth: 6%Quarterly retention: 96% (up 200 bps YoY)Trailing 12-month retention: 95% (up 1 percentage point vs Q4 '25)
    		—8% as reported—32.5%
    MIS - Investment Grade
    Largest contributor to transactional revenue growth within Corporate Finance, driven by a record first quarter and second highest quarter ever for issuance, including jumbo transactions from hyperscalers.
    		—33%——
    MIS - Specialty Grade
    Investor appetite held up well for most of the quarter, but sub-investment-grade issuers are more sensitive to issuance windows.
    		—31%——
    MIS - Bank Loan
    Activity moderated in March following a strong start to the year.
    		—declined——
    MIS - Public, Project and Infrastructure Finance
    Driven by infrastructure finance, which delivered its second strongest quarter of the past decade, with demand from energy transition, transportation, and AI-related infrastructure.
    		—8%——
    MIS - Financial Institutions
    Supported by private credit activity, partially offset by lower opportunistic issuance from infrequent issuers in banking and insurance.
    		—modestly higher——
    MIS - Structured Finance
    Large AMBS and RMBS reductions in EMEA were offset by softer CMBS and CLO activity in the U.S., especially refinancing.
    		—slightly lower——

    Operational metrics

    21
    Adjusted diluted EPS
    $4.33up 13%
    Q1 FY26

    Contributed to by strong revenue growth and operating leverage.

    Adjusted operating margin
    53.2%up 150 basis points
    Q1 FY26

    Driven by disciplined cost management.

    Private credit related revenue
    80%YoY growth
    Q1 FY26

    Demand for independent credit assessment increased as private markets scale and come under greater scrutiny.

    ARR for lending suite
    18%YoY growth
    Q1 FY26

    Driven by customers upgrading to an integrated platform spanning origination, decisioning, and monitoring, with workflow integration and AI enablement.

    IRP cross-selling and upselling contribution to insurance net growth
    almost half
    Q1 FY26

    Reflects sustained demand for digitization via the intelligent risk platform.

    Share repurchases executed
    $1.5 billion
    Q1 FY26

    Active in the market given price levels and market dynamics.

    Total capital returned to shareholders
    $1.7 billion
    Q1 FY26

    Through a combination of share repurchases and dividends.

    Hyperscaler issuance from top 5
    exceeded full year 2025 levelsvs full year 2025
    YTD Q1 FY26

    Contributed to near-record investment-grade volumes, including several jumbo AI-related financings.

    Rated issuance
    $2 trillionsurpassed for the first time
    Q1 FY26

    Led by near record investment-grade volumes, including several jumbo AI-related financings totaling more than $100 billion.

    Investment-grade spreads widening
    15%
    March FY26

    Widened in March, but remained well below levels seen around Liberation Day.

    High-yield spreads widening
    30%
    March FY26

    Widened in March, but remained well below levels seen around Liberation Day.

    M&A-related issuance
    highest in a number of years
    Q1 FY26

    Viewed as an encouraging indicator for the balance of 2026.

    Infrastructure finance performance
    second strongest quarter of the past decade
    Q1 FY26

    Key demand drivers include funding needs tied to energy transition, transportation, and AI-related infrastructure.

    MA adjusted operating margin
    34% to 35%
    FY26

    On track for full year, reflecting impact of prior restructuring, cost management, and resource reallocation.

    MA adjusted operating margin
    32.5%up 250 basis points YoY
    Q1 FY26

    Expansion reflects impact of prior restructuring actions, disciplined cost management, and thoughtful reallocation of resources.

    MA transactional revenue decline
    54%YoY
    Q1 FY26

    Reflecting both the learning divestiture and a deliberate focus on scalable recurring revenue streams.

    MA recurring revenue as % of total MA revenue
    98%
    Q1 FY26

    Underscoring the shift towards renewable subscription-based solutions.

    MA Decision Solutions as % of total MA ARR
    44%
    Q1 FY26

    Continues to be a key growth engine for MA.

    MA quarterly retention
    96%up 200 basis points YoY
    Q1 FY26

    Improved as outsized government and ESG-related churn from Q1 2025 has now lapsed.

    MA trailing 12-month retention
    95%up 1 percentage point vs Q4 '25
    Q1 FY26

    Within historical range, evidence that solutions remain mission-critical.

    Investment-grade issuance in March
    80% in 6 days
    March FY26

    Highlights risk-on/risk-off windows and strong underlying demand.

    Product announcements

    4
    ProductTypeDetails
    Moody's for compliancelaunch
    Stablecoin methodologylaunch
    Blockchain-agnostic capabilities on The Canton Networklaunch
    Bitcoin-backed bond ratinglaunch

    Deals & partnerships

    12
    Anthropicpartnership

    Partnership for model context protocol integrations, making Moody's licensed intelligence accessible directly within enterprise AI environments like Claude. Agentic credit and compliance workflows are available natively inside the Claude interface through an MCT application.

    AWS marketplacepartnership

    Moody's scaling workflow embedded distribution by making its agentic solutions available through the AWS marketplace, meeting customers inside their existing cloud and procurement ecosystems.

    Microsoftpartnership

    Moody's scaling workflow embedded distribution by launching a dedicated Moody's agent in Microsoft 365 CoPilot and making Moody's intelligence available as a grounding data source across CoPilot experiences (CoPilot Chat, Researcher, Copilot and Excel).

    One of the world's 5 largest asset managerscustomer contractapproximately $6 millionmultiyear

    Signed a multiyear deal to integrate Moody's decision-grade intelligence into public and private credit workflows.

    Second of the world's 5 largest asset managerscustomer contractover $2.5 millionmultiyear

    Signed a multiyear contract and adopted multiple Moody's modules for credit and compliance workflows, including the first structured finance software win with a trustee.

    Global athleisure brandcustomer contractmultiyear

    Tripled its relationship with Moody's and signed a multiyear contract for an automated credit decisioning solution.

    One of the top 3 reinsurers in the worldcustomer contract

    Adopted Moody's intelligent risk platform (IRP) and high-definition models.

    Global real estate firmcustomer contract

    Selected Moody's enterprise-wide solution for counterparty screening and monitoring, covering millions of entities across 275,000 sites in over 80 countries.

    Two government tax authoritiescustomer contractlong-term

    Selected Moody's as their long-term data partner for mission-critical workflows requiring precision and auditability.

    Leading specialty insurercustomer contract

    Embedded Moody's private company data and proprietary risk signals into real-time surety underwriting workflows.

    Major asset managercustomer contract

    Embedded Moody's private and public credit risk data sets into its core portfolio platform.

    Leading global professional services firmcustomer contract

    Expanded access to Moody's real-time information and research intelligence for thousands of consultants.

    Risks & headwinds

    5
    Volatile geopolitical backdropQ1 FY26, ongoing

    Investment grade and high yield spreads widened in March by roughly 15% and 30%, respectively

    Mitigation: Our base case assumes the current market turbulence is largely contained to April with issuance recovering through Q2 and Q3, if volatility persists beyond April, we'd have less confidence in a full recovery in Q2 and Q3 and would expect full year MIS revenue growth to moderate to the mid-single-digit range

    Market turbulence impacting issuance recoveryQ2 and Q3 FY26

    If volatility persists beyond April, we'd have less confidence in a full recovery in Q2 and Q3 and would expect full year MIS revenue growth to moderate to the mid-single-digit range with adjusted diluted EPS trending towards the low end of our guidance range.

    Mitigation: Management maintains current guidance based on expectation of recovery, but provides a contingency outlook for lower revenue and EPS if volatility persists.

    Sensitivity of sub-investment-grade issuers to issuance windowsOngoing

    Specialty grade revenue grew 31%, with investor appetite holding up well for most of the quarter despite geopolitical volatility. Now we're watching this closely as sub-investment-grade issuers tend to be more sensitive to issuance windows.

    Mitigation: Close monitoring of market conditions for sub-investment-grade issuers.

    Impact of divestiture on MA reported revenueFY26

    excluded its contribution from our reported revenue outlook, which moves us towards the lower end of our mid-single-digit MA revenue guidance range.

    Mitigation: The divestiture does not change expectations for ARR or organic constant currency recurring revenue growth, which remain in the high single-digit range.

    Regulatory scrutiny on AI decision-makingOngoing

    heightened sensitivity for sure around the use of AI to actually be making decisions

    Mitigation: Active dialogue with regulators, providing transparency, and maintaining a strong control environment around AI deployment, especially for rating processes and tools that provide insights rather than make decisions.

    Q&A highlights

    7

    How many customers are accessing Moody's data through LLM channels, and what are the plans to monetize this distribution?

    Management stated that a number of large financial institutions are trialing agent-ready data through MCPs or direct integration into their internal AI workflows. This creates opportunities to upgrade commercial models, as customers seek enterprise-wide access to Moody's intelligence. It's in early days, with efforts to convert trials to sales throughout the year.

    “if they want to bring our intelligence into the corporate and investment bank, we need to make sure that there's an arrangement and a license that allows them to access that content across that entire division as opposed to in the past, we may have had been serving different use cases in different parts of the bank.”

    asked by Keen Fai Tong · answered by Robert Fauber

    2 min read6 chapters

    Detailed Narrative

    01

    AI and Workflow Integration

    Moody's is strategically embedding its intelligence into customer decision-making workflows, particularly in lending, underwriting, and compliance. This approach, supported by partnerships with hyperscalers like Microsoft, Anthropic, and AWS, allows customers to access Moody's licensed data directly within their AI environments (e.g., ChatGPT Enterprise, Claude, Microsoft 365 CoPilot). This strategy aims to expand distribution, enhance customer retention, and drive more durable recurring revenue by making decision-grade intelligence foundational to customer operations.

    02

    Digital Finance and Blockchain Innovation

    Moody's is extending its ratings expertise into new asset classes and market infrastructures, including digital finance. The company was the first rating agency to publish a methodology for stablecoins, an asset class projected to reach over $2 trillion by 2030, and has deals in the pipeline. It also became the first rating agency with blockchain-agnostic capabilities, operating a node on The Canton Network, and rated an inaugural Bitcoin-backed bond. These initiatives reflect real customer demand for trusted risk assessment in evolving financial markets.

    03

    Moody's Analytics Strategic Reshaping

    Moody's Analytics is undergoing a portfolio reshaping, focusing on high-growth areas and product suites with cross-selling opportunities, exemplified by the divestiture of the Regulatory Solutions business. This involves reallocating resources in product development and sales towards strategic areas like lending, decision-grade data, and insurance underwriting. The goal is to fund investments in these growth areas without increasing overall costs, while maintaining mature products for existing customers.

    04

    Private Credit Market Dynamics

    Despite increased credit stress and some deals shifting to public markets, demand for independent credit assessment in private credit remains strong. This is driven by investor demand for third-party validation and the structural need for diverse funding sources given stretched sovereign balance sheets. Moody's saw over 80% year-over-year growth in private credit-related revenue in Ratings and is well-positioned to serve these needs across both its Ratings and Analytics businesses with its commercial credit scoring tools.

    05

    Hyperscaler Issuance Impact

    Hyperscaler issuance, particularly from the top 5, has already exceeded full-year 2025 levels in Q1 2026, contributing significantly to near-record investment-grade volumes. These issuers are treated similarly to other frequent investment-grade issuers, participating in frequent issuer pricing programs. While this can influence the revenue mix, the substantial volume indicates strong underlying demand for funding, especially for AI-related infrastructure.

    06

    AI Efficiency in Ratings

    Moody's has made significant investments in technology, workflow automation, and AI enablement within its Ratings business. These efforts streamline credit workflows, allowing analysts to focus more on credit analysis by automating tasks like financial statement spreading and data gathering. This has supported the ability to handle record issuance volumes while expanding margins, and is also expected to provide new insights for analysts, enhancing ratings quality and research.

    AI-generated summary of the company’s earnings call. Not investment advice.